New York Assembly Bill A00259

New York 2025-2026 Regular Session

• Introduced: 1/8/25
• Refer: 1/8/25
• Refer: 1/7/26

Caption

Increases the tax exemption for pensions and annuities for persons age fifty-nine and one-half or greater from $20,000 to $25,000 in 2027, $30,000 in 2028, $35,000 in 2029 and $40,000 for each subsequent year.

Summary

This bill amends New York’s personal income tax law to increase the exemption for certain pension and annuity income received by individuals age 59½ and older. Under current law, up to $20,000 of qualifying pension and annuity income may be excluded from state taxable income. The bill phases that exemption upward for tax years beginning in 2027, raising it to $25,000, then to $30,000 in 2028, $35,000 in 2029, and $40,000 for each year thereafter. The exemption applies to a range of retirement income, including employer pensions, annuities, IRAs, and certain self-employed and owner-employee retirement plans, while continuing to exclude lump-sum distributions. It also clarifies that the calculation for joint filers is made as if spouses were filing separately, and it preserves treatment of qualifying payments received by a beneficiary after the original recipient’s death.

Impact

The bill would amend section 612 of the Tax Law, expanding the state income tax subtraction for retirement income and reducing taxable income for eligible retirees and beneficiaries. Its practical effect would be to lower state personal income tax liability for older New Yorkers receiving qualifying pension or annuity payments, with the largest benefit accruing after the phased increases take effect. The measure does not alter federal tax rules, but it would change how New York computes state taxable income for these retirement distributions.

Sentiment

The available context suggests generally favorable treatment of the bill, as reflected by its introduction, committee referral, amendment, and recommittal for further consideration. The bill’s stated purpose is straightforward and targeted: to provide additional tax relief to retirees and those living on pension income. No votes or committee transcript excerpts are provided, so there is no recorded opposition or debate in the supplied materials.

Contention

The main policy issue is fiscal and distributional: increasing the pension and annuity exemption would reduce state tax revenue while benefiting retirees age 59½ and older. Potential points of contention include whether the phased-in increases are affordable, whether the benefit should be limited to certain income types or age groups, and whether the exemption should be expanded further or structured differently. The bill text itself does not identify opponents, but any debate would likely center on revenue impact, fairness to other taxpayers, and the scope of retirement-income relief.